Marin Scotten
Mon, October 21, 2024
Donald Trump | Social Security Photo illustration by Salon/Getty Images
Social Security funds could run out in the next six years if former President Donald Trump wins in November, according to a new report from the bipartisan group Committee for a Responsible Federal Budget.
The program's funding is already in crisis and expected to become insolvent as early as 2033. Trump’s policies would add over $2.3 trillion to Social Security’s deficit between 2026 and 2033 and — and cause a 33% cut to benefits in 2035, the report found.
“We find President Trump’s campaign proposals would dramatically worsen Social Security’s finances,” the report released Monday states.
Many of Trump’s proposals would “widen Social Security’s cash deficits,” the report reads. Currently, 40% of Social Security recipients pay taxes on some portion of their benefit and that money goes back into the program. Trump has proposed to cut the taxation of all Social Security benefits, which would dramatically weaken the program’s longevity.
The Republican nominee has also promised to cut taxes on tips and overtime pay, which could cost Social Security anywhere from $150 million to $1 trillion, the report found. His proposed import tariffs and mass deportations of undocumented immigrants would also impact the program, which benefits over 71 million people.
“If President Trump’s campaign agenda were enacted in full, we estimate it would shrink that window by one-third, to only six years," the report said.
The watchdog group found that Vice President Kamala Harris’ proposed policies would neither accelerate or slow Social Security’s funding trajectory.
Despite Social Security’s uncertain future, the topic hasn’t come up much in this year’s election conversations. Both candidates have vaguely pledged to protect the program, but neither has shared a detailed plan for doing so.
Mon, October 21, 2024
Donald Trump | Social Security Photo illustration by Salon/Getty Images
Social Security funds could run out in the next six years if former President Donald Trump wins in November, according to a new report from the bipartisan group Committee for a Responsible Federal Budget.
The program's funding is already in crisis and expected to become insolvent as early as 2033. Trump’s policies would add over $2.3 trillion to Social Security’s deficit between 2026 and 2033 and — and cause a 33% cut to benefits in 2035, the report found.
“We find President Trump’s campaign proposals would dramatically worsen Social Security’s finances,” the report released Monday states.
Many of Trump’s proposals would “widen Social Security’s cash deficits,” the report reads. Currently, 40% of Social Security recipients pay taxes on some portion of their benefit and that money goes back into the program. Trump has proposed to cut the taxation of all Social Security benefits, which would dramatically weaken the program’s longevity.
The Republican nominee has also promised to cut taxes on tips and overtime pay, which could cost Social Security anywhere from $150 million to $1 trillion, the report found. His proposed import tariffs and mass deportations of undocumented immigrants would also impact the program, which benefits over 71 million people.
“If President Trump’s campaign agenda were enacted in full, we estimate it would shrink that window by one-third, to only six years," the report said.
The watchdog group found that Vice President Kamala Harris’ proposed policies would neither accelerate or slow Social Security’s funding trajectory.
Despite Social Security’s uncertain future, the topic hasn’t come up much in this year’s election conversations. Both candidates have vaguely pledged to protect the program, but neither has shared a detailed plan for doing so.
Trump Proposals Could Lead to a 33% Cut in Social Security Benefits
Michael Rainey
Mon, October 21, 2024
Social Security will be forced to cut benefits by an estimated 23% in 10 years if Congress fails to prop up the program’s trust funds before then, but a new analysis from a budget watchdog group warns that Republican presidential candidate Donald Trump’s proposals would move up the day of reckoning by as much as three years while forcing an even larger benefit reduction.
The report from the nonpartisan Committee for a Responsible Federal Budget, which advocates for debt and deficit reduction, found that several of Trump’s proposals would widen Social Security’s projected financial shortfall. Ending taxes on Social Security benefits would reduce the program’s cash balance by an estimated $950 billion between 2026 and 2035. Eliminating federal income taxes on tips and overtime income would cost about $900 billion over the same time period, while the combination of more restrictive immigration rules, which would reduce the number of migrant workers paying into the system, and higher tariffs, which would increase the cost of many goods and thereby increase annual cost-of-living adjustments, would cost about $400 billion.
Altogether, the proposals would reduce the cash balance in the Social Security system by roughly $2.3 trillion over a decade, according to the group’s “central estimate” of the effects of Trump’s plans. (The “low” estimate for the revenue loss is $1.3 trillion over 10 years, while the “high” estimate is $2.8 trillion.)
As a result, the Social Security system would be forced to cut benefits in fiscal year 2031 rather than in 2034, as currently projected. “In other words,” the group said, “the trust funds would be insolvent only six years after the next President takes office instead of nine – reducing the remaining life of the trust fund by one-third.”
Additionally, the size of the benefit cut would increase under Trump’s proposals. The current projected 23% cut — roughly $16,500 a year for a typical dual-income household — would become a 33% cut by 2035.
No plans to bolster Social Security on the table: Neither presidential candidate has offered a plan to improve Social Security’s long-term financial health and avoid the projected benefit cuts. The CRFB analysts did note, however, that Vice President Kamala Harris’s proposals would not have a significant negative effect on the Social Security trust funds.
Harris campaign spokesperson Joe Costello told CBS News that the analysis shows that Trump is a threat to the Social Security system, while the Democratic candidate seeks to safeguard it. “Vice President Harris is committed to protecting Social Security benefits and is the only candidate who will actually fight for seniors, not just pay them lip service on the campaign trail,” Costello said.
Trump spokeswoman Karoline Leavitt rejected the CRFB analysis altogether while arguing without basis that undocumented immigrants are a serious threat to the Social Security system. “The so-called experts at CRFB have been consistently wrong throughout the years,” Leavitt said in a statement. “By unleashing American energy, slashing job-killing regulations, and adopting pro-growth America First tax and trade policies, President Trump will quickly rebuild the greatest economy in history and put Social Security on a stronger footing for generations to come,” she said.
In its analysis, CRFB addressed Trump’s argument about the curative power of energy production, saying, “increased energy exploration is unlikely to have a meaningful effect on Social Security.” And while faster economic growth could indeed help Social Security’s finances, CRFB was skeptical about the potential for Trump’s plans to do so. “[B]ased on available analyses and understanding the effects of President Trump’s agenda on the national debt, it is unlikely his plans would significantly boost the size of the economy, and many estimates find his plans would reduce long-term output,” CRFB said.
chart-Social-Security-trust-fund-CRFB-10212024-600.png
A Trump presidency would drain Social Security's finances faster, budget group warns
The report from the nonpartisan Committee for a Responsible Federal Budget, which advocates for debt and deficit reduction, found that several of Trump’s proposals would widen Social Security’s projected financial shortfall. Ending taxes on Social Security benefits would reduce the program’s cash balance by an estimated $950 billion between 2026 and 2035. Eliminating federal income taxes on tips and overtime income would cost about $900 billion over the same time period, while the combination of more restrictive immigration rules, which would reduce the number of migrant workers paying into the system, and higher tariffs, which would increase the cost of many goods and thereby increase annual cost-of-living adjustments, would cost about $400 billion.
Altogether, the proposals would reduce the cash balance in the Social Security system by roughly $2.3 trillion over a decade, according to the group’s “central estimate” of the effects of Trump’s plans. (The “low” estimate for the revenue loss is $1.3 trillion over 10 years, while the “high” estimate is $2.8 trillion.)
As a result, the Social Security system would be forced to cut benefits in fiscal year 2031 rather than in 2034, as currently projected. “In other words,” the group said, “the trust funds would be insolvent only six years after the next President takes office instead of nine – reducing the remaining life of the trust fund by one-third.”
Additionally, the size of the benefit cut would increase under Trump’s proposals. The current projected 23% cut — roughly $16,500 a year for a typical dual-income household — would become a 33% cut by 2035.
No plans to bolster Social Security on the table: Neither presidential candidate has offered a plan to improve Social Security’s long-term financial health and avoid the projected benefit cuts. The CRFB analysts did note, however, that Vice President Kamala Harris’s proposals would not have a significant negative effect on the Social Security trust funds.
Harris campaign spokesperson Joe Costello told CBS News that the analysis shows that Trump is a threat to the Social Security system, while the Democratic candidate seeks to safeguard it. “Vice President Harris is committed to protecting Social Security benefits and is the only candidate who will actually fight for seniors, not just pay them lip service on the campaign trail,” Costello said.
Trump spokeswoman Karoline Leavitt rejected the CRFB analysis altogether while arguing without basis that undocumented immigrants are a serious threat to the Social Security system. “The so-called experts at CRFB have been consistently wrong throughout the years,” Leavitt said in a statement. “By unleashing American energy, slashing job-killing regulations, and adopting pro-growth America First tax and trade policies, President Trump will quickly rebuild the greatest economy in history and put Social Security on a stronger footing for generations to come,” she said.
In its analysis, CRFB addressed Trump’s argument about the curative power of energy production, saying, “increased energy exploration is unlikely to have a meaningful effect on Social Security.” And while faster economic growth could indeed help Social Security’s finances, CRFB was skeptical about the potential for Trump’s plans to do so. “[B]ased on available analyses and understanding the effects of President Trump’s agenda on the national debt, it is unlikely his plans would significantly boost the size of the economy, and many estimates find his plans would reduce long-term output,” CRFB said.
chart-Social-Security-trust-fund-CRFB-10212024-600.png
A Trump presidency would drain Social Security's finances faster, budget group warns
Grace Eliza Goodwin
Updated Mon, October 21, 2024 at 2:26 PM MDT·4 min read
Trump's proposals would dramatically worsen Social Security's finances, a nonpartisan budget group is warning.
The group predicts Trump's agenda would push up Social Security insolvency by 3 years.
Harris' proposals would have little impact on Social Security's insolvency timeline, the group says.
Americans are in danger of losing their full benefits by the mid-2030s — and a nonpartisan budget group is warning that if Trump is elected, his policies could push the funding crisis years sooner.
The Committee for a Responsible Federal Budget (CRFB), a nonpartisan nonprofit that examines the impacts of fiscal policies, released a report Monday outlining the negative effects it predicts a second Trump presidency would have on Social Security.
"We find President Trump's campaign proposals would dramatically worsen Social Security's finances," the CRFB wrote in its report.
In a recent report, the Congressional Budget Office predicted that a main Social Security trust fund could be exhausted in 2034, meaning that Americans wouldn't get their full benefits.
The Social Security and Medicare Boards of Trustees estimated that the fund would run out a year later, in 2035.
But the CRFB estimates in its report that if Trump wins a second term and enacts his current campaign proposals, those funds would become insolvent three years sooner than the CBO's prediction, in 2031. The CRFB says that would lead to Americans losing 33% of their Social Security benefits across the board by 2035 — a bigger cut compared to the CBO's current 23% projection.
The CRFB estimates that the Republican presidential nominee's promises to stop taxing Social Security benefits, eliminate taxes on tips and overtime, impose tariffs, and increase deportations would worsen Social Security's cash deficits when combined.
But that's not all the damage Trump's proposals would do, according to the CRFB.
In addition to advancing the insolvency timeline and reducing Americans' benefits, Trump's agenda would raise Social Security's ten-year cash shortfall by $2.3 trillion through 2035 and raise its annual shortfall by about 50% in 2035, the CRFB predicts in its report.
For Social Security to restore 75-year solvency under these conditions, current law benefits would need to be decreased by about a third, or revenue would need to increase by half.
The Trump campaign's national press secretary, Karoline Leavitt, disputed the CRFB's report in a statement shared with Business Insider.
"The so-called experts at CRFB have been consistently wrong throughout the years. President Trump delivered on his promise to protect Social Security in his first term, and President Trump will continue to strongly protect Social Security in his second term," Leavitt said in the statement.
"By unleashing American energy, slashing job-killing regulations, and adopting pro-growth America First tax and trade policies, President Trump will quickly rebuild the greatest economy in history and put Social Security on a stronger footing for generations to come, all the while eliminating taxes on Social Security for America's well-deserving seniors," Leavitt continued.
Meanwhile, the CRFB had a rosier outlook when it examined Kamala Harris' policy proposals.
The CRFB says in its report that the Democratic presidential nominee's campaign proposals "would not have large effects on Social Security trust fund solvency." Because Harris's policies would only affect the insolvency timeline by weeks or months, the group did not create a similar report for her, CRFB's senior policy director Marc Goldwein said, according to the Washington Post.
A spokesperson for the Harris-Walz campaign, Joseph Costello, said in a statement shared with BI: "Vice President Harris is committed to protecting Social Security benefits and is the only candidate who will actually fight for seniors, not just pay them lip service on the campaign trail."
Both Trump and Harris have said they would protect Social Security, but neither candidate has laid out specific plans to alleviate the expected $16,500/year cut to benefits that a typical couple retiring just before insolvency could face, the CRFB said in its report.
The promise of Social Security to provide a retirement free from poverty is already not living up to the reality many Americans are facing.
Business Insider previously spoke to over 40 baby boomers and some Gen Xers who said they're struggling to reach a comfortable retirement, and Social Security isn't doing enough to keep them afloat. Some retirees have even had their benefits unexpectedly slashed thanks to murky provisions.
Donald Trump's Proposals Would Hurt Social Security’s Finances, Analysis Finds
Arthur Delaney
Mon, October 21, 2024
The popular Social Security retirement insurance program would run out of money faster if Congress adopted policies promoted by former President Donald Trump, according to a new analysis by an authoritative budget group.
Despite Trump’s promise to protect Social Security, his proposals to cut tax breaks on tips and overtime pay, among other things, would “dramatically worsen” Social Security’s financial position, the Committee for a Responsible Federal Budget said Monday.
“Social Security will be only nine years away from insolvency when the next President takes office,” the CRFB said on its website. “If President Trump’s campaign agenda were enacted in full, we estimate it would shrink that window by one-third, to only six years.”
Social Security’s trust fund has enough money to pay full benefits until 2034, according to the Congressional Budget Office, at which point incoming revenue from payroll taxes would cover only 83% of benefits. The Committee for a Responsible Federal Budget, which opposes large budget deficits, said Trump’s various proposals would hasten the fund’s depletion to 2031.
The harm to Social Security’s finances under Trump’s agenda results from a combination of proposals, some directly related to Social Security, and others not.
Trump’s idea to cut taxes on tipped income, overtime pay and Social Security benefits, for instance, takes away money that funds benefits. Those proposals would reduce funding by as much as $2 trillion over a decade, per the CRFB.
Trump’s proposals for tariffs on imported goods, plus mass deportation of undocumented immigrants, meanwhile, could reduce trust fund revenue by as much as $750 billion. The former policy would impact Social Security by boosting inflation, thereby forcing Social Security to speed up its annual cost-of-living adjustments. Mass deportations would reduce the number of workers paying into the program.
The former president often claims immigrants are a drain on Social Security, but they help the program’s finances by contributing through automatic payroll deductions even when they are ineligible to receive benefits in the future.
Trump has steered the Republican Party away from its past support of cutting Social Security benefits in order to improve the program’s finances, but his ad hoc campaign promises to cut taxes for various voter groups would make it more difficult to balance the program’s projected revenue and spending. Trump has said he would close the gap with faster economic growth, which is a dubious proposition, while Democrats have suggested improving Social Security solvency entirely through taxes on higher earners.
“The so-called experts at CRFB have been consistently wrong throughout the years,” Trump campaign press secretary Karoline Leavitt said in an emailed statement, without pointing to examples of CRFB being wrong.
“The only candidate who poses a threat to the solvency of Social Security is dangerously liberal Kamala Harris — whose mass invasion of millions of illegal aliens will, if they are allowed to stay, cause Social Security to buckle and collapse,” Leavitt said. “By unleashing American energy, slashing job-killing regulations, and adopting pro-growth America First tax and trade policies, President Trump will quickly rebuild the greatest economy in history and put Social Security on a stronger footing for generations to come, all the while eliminating taxes on Social Security for America’s well-deserving seniors.”
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Report: Trump's plans could force Social Security benefit cuts in 6 years
Todd Spangler, Detroit Free Press
Updated Mon, October 21, 2024 at 6:18 PM MDT·5 min read
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A new report by a nonpartisan budget organization in Washington concluded Monday that while neither Democratic Vice President Kamala Harris' or Republican former President Donald Trump's plans would address Social Security's looming insolvency, Trump's would "dramatically worsen" the social safety net program's finances.
The Committee for a Responsible Federal Budget issued an analysis reported in the Washington Post that indicated that Trump's sweeping campaign promises of tax cuts on tips, overtime and Social Security benefits, along with higher prices caused by tariffs and mass deportation efforts he has said he would order would put Social Security in a position of becoming insolvent in as short a time as six years and requiring benefits to be cut by a third if enacted.
Harris' plans, on the other hand, which also include cutting taxes on tips, increasing border security and extending some parts of the 2017 tax cuts would "likely expand Social Security’s deficits," the report said, but proposed minimum wage increases and other measures could boost payroll tax collections. "On net, these changes are likely to modestly increase ten-year deficits and advance insolvency by several weeks or months," the report said in a footnote.
The group, which was founded more than 40 years ago to address and research fiscal policy, has a long history of bipartisan involvement and its current co-chairs include former Indiana Gov. Mitch Daniels, a Republican, and former Defense Secretary Leon Panetta, a Democrat.
The analysis comes near the end of a fractious campaign between Harris and Trump, with Michigan a key battleground state where polling shows them effectively tied. Both candidates have promised to protect Social Security's finances but neither has put forward a specific plan for staving off the social safety net's insolvency.
More: Silent mic, 'Black girl magic', crying baby: 1 day in Michigan as Trump, Harris woo it
The Congressional Budget Office (CBO), in testimony provided to Congress, has estimated that under current payroll tax revenues and expected benefit payments, the Old Age and Survivors Insurance trust fund, which pays out to retirees, would likely see benefits cut by 25% beginning in 2034 because of a shortfall and the Disability Insurance trust fund would see benefits cut by 13% in 2065. If the two were combined — which is not allowed under current law but could be to shore up a shortfall — estimated revenues will equal 77% of scheduled payments in 2035, requiring benefits to be reduced by 23% absent an increase in payroll taxes, the CBO said.
The Committee for a Responsible Federal Budget report found that while Harris' proposals would have a negligible effect on that prediction, Trump's would exacerbate it, cutting the time of predicted insolvency for a combined program from fiscal year 2034 to FY 2031 or 2032.
"Upon insolvency, the law calls for limiting Social Security spending to its revenue stream, which we've previously estimated would mean a $16,500 cut in annual benefits for a typical dual-income couple retiring in 2033. CBO estimates that benefits would have to be cut by 23% by 2035 under current law," the analysis said. "Under President Trump's agenda, we estimate that benefit cut would total 33% by 2035, with a range of 29% to 36% depending on the scenario."
The analysis relied on the group's other estimates of the effects of both Harris' and Trump's economic proposals and what they would mean if fully implemented. Those estimates, which included a range of potential outcomes, concluded that Harris' plan could be anywhere from deficit neutral over a decade to worsening it by up to $8.1 trillion, with a central estimate of costing $3.5 trillion.
Trump's plans, the group said, would cost at least $1.45 trillion on the low end and up to $15.15 trillion over a decade, with a central estimate of $7.5 trillion.
In the current analysis, the Committee for a Responsible Federal Budget said ending taxation of Social Security benefits, as Trump has proposed, will remove as much as $950 billion in revenue from the program over a decade, and ending taxes on tips and overtime wages could deny it more than $1 trillion. It also concluded that tariffs promoted by Trump as a way to cut imports and spur manufacturing in the U.S. but which most economists say would increase costs on Americans, as well as plans for a mass deportation of immigrants in the country illegally, could cost the program as much as $750 billion over 10 years.
Workers in the country illegally cannot collect Social Security benefits but still pay billions in payroll taxes, including those that go into bolstering Social Security.
Social Security, while doling out benefits to retirees, their families and disabled workers, is paid for through a trust fund supported largely by current payroll tax collection, not merely those that workers contributed while they were employed. Under the law, if revenues were to fall short of benefits, benefits would have to be reduced unless additional revenue, through taxes or other means, were added to the trust funds.
There were some 2.3 million Social Security beneficiaries living in Michigan as of December 2023.
Responding to the report, Trump Campaign National Press Secretary Karoline Leavitt maintained Trump protected Social Security during his previous term. "By unleashing American energy, slashing job-killing regulations and adopting pro-growth America First tax and trade policies, President Trump will quickly rebuild the greatest economy in history and put Social Security on a stronger footing for generations to come," she said.
Trump, however, also saw historic job losses due to the COVID-19 shutdowns at the end of that term, while Democratic President Joe Biden's tenure has seen some 16 million new jobs created, though there was a period of particularly high inflation for much of that time that offset wage gains. As for the Social Security trust funds, CBO estimated they would be exhausted in 2030 in 2017, Trump's first year in office; that moved only a year out, to 2031, in his last year in office in 2020.
“Donald Trump’s agenda poses an imminent threat to Social Security, and seniors could have their benefits cut by a third," said Joseph Costello, a spokesman for the Harris campaign. "This is yet another reason that Americans simply cannot afford the risk of another Trump term."
Contact Todd Spangler: tspangler@freepress.com. Follow him on Twitter@tsspangler.
This story has been updated to add new information.
This article originally appeared on Detroit Free Press: Report: Trump's plans could force Social Security cuts in 6 years
Social Security funds could run out in 6 years under Trump plans: Analysis
Aris Folley
Mon, October 21, 2024
Social Security’s trust fund reserves could be depleted as early as 2031 under former President Trump’s proposals, several years earlier than recent projections, according to an analysis from the Committee for a Responsible Federal Budget (CRFB).
In an analysis published Monday, the fiscal watchdog weighed the impact several Trump proposals — including his plan to end taxation of Social Security benefits, scrap taxes on tips and overtime, impose new tariffs and expand deportations — would have on Social Security’s finances over the coming years, were he to return to the White House and implement them.
The combined trust funds for Social Security retirement and disability benefits are currently projected by the program’s trustees to run out in 2035, a year later than previously expected, after economic growth exceeded expectations last year.
But under Trump’s proposals, the CRFB estimated funds could run out by 2031 while increasing Social Security’s cash deficit $2.3 trillion between fiscal 2026 and fiscal 2035.
In a closer look at the price tag, the CRFB said its central estimate found the biggest cost stemmed from Trump’s proposal to do away with taxation of Social Security benefits — a move that would cost $950 billion.
The next big-ticket item, ending payroll taxes on tips and overtime pay, would cost about $900 billion, while proposed changes on tariffs and immigration could add $400 billion to Social Security’s cash deficit.
Ending taxes on tips and overtime pay would lead to a reduction in “payroll tax collection accruing to the Social Security trust funds,” and imposing large tariffs on imports could “either increase cost-of-living adjustments (COLAs) through higher inflation or reduce taxable payroll,” the analysis stated.
The CRFB also said expanding deportations could lead to fewer “immigrant workers paying into the Social Security trust funds.”
Trump’s campaign slammed the analysis in a statement Monday.
“The so-called experts at CRFB have been consistently wrong throughout the years. President Trump delivered on his promise to protect Social Security in his first term, and President Trump will continue to strongly protect Social Security in his second term,” Trump campaign national press secretary Karoline Leavitt said in a statement, while instead pointing the finger at Vice President Harris, saying immigration under her agenda “would cause Social Security to buckle and collapse.”
The CRFB said Harris’s plans to increase border security and extend some parts of Trump’s signature 2017 tax law could “expand Social Security’s deficits by reducing revenue collection from payroll taxes and taxation of benefits.” But the group said her campaign’s proposal overall would not “have large effects on Social Security trust fund solvency.”
“At the same time, increases in the minimum wage and various tax compliance measures would likely reduce Social Security’s deficits by boosting payroll tax collection,” the CRFB said. “On net, these changes are likely to modestly increase ten-year deficits and advance insolvency by several weeks or months.”
The watchdog additionally forecast potentially bigger cuts to benefits upon insolvency under Trump’s proposals than under current law. The group estimated a 33 percent cut to benefits after tax for roughly half of beneficiaries under Trump’s plans, compared to 23 percent under current law.
“But they would be cut by closer to 30 percent for the seniors with just enough income to be paying taxes on benefits, 26 percent for a household with income in retirement at about $100,000 per year, and 3 percent for the very highest income households,” the group said while assessing the potential impact of Trump’s proposed policies thus far.
Trump has said on the campaign trail that he will not “cut one cent from Social Security.” But experts say that lawmakers will likely need to find common ground on hiking taxes or reducing benefits, or both, to prevent across-the-board benefits cuts if the program goes insolvent in the years ahead.
“Restoring solvency over the next 75 years would require the equivalent of reducing all future benefits by 24 percent or increasing revenue by 35 percent,” the CRFB said in its analysis.
Recent scoring from the group on Trump’s previous Medicare proposals have been more favorable for the former president, however. A CRFB analysis looking at his last budget proposal as president found the proposals offered at the time would have “strengthened” Medicare’s fiscal position and “modestly slowed” its cost growth.
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Trump's policies would jeopardize Social Security, report finds. 'Beyond irresponsible,' says one expert.
The Committee for a Responsible Federal Budget says Donald Trump's proposed tariffs, tax cuts, and deportations would run the program dry earlier than expected.
Janna Herron
·Senior Columnist
Updated Mon, October 21, 2024
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Seniors would face heftier cuts to their Social Security benefits sooner than expected if Donald Trump wins the presidential election and his campaign promises are implemented, a new analysis found.
The reserve fund for Social Security would run empty by 2031 instead of the current estimate of 2034 if Trump's tax breaks, tariffs, and mass deportations are imposed, according to a new report from the Committee for a Responsible Federal Budget (CRFB).
At that time, Social Security benefits would be cut by 30% to 31%, reaching 33% by 2035. If Social Security remains on the current trajectory, the reduction would be 23% by 2035.
"Social Security is nine years from insolvency, and neither campaign has a plan to solve it," said Marc Goldwein, a senior policy director for CRFB, a nonpartisan public policy organization. "But President Trump's plans would make it much, much worse."
Though not considered in this report, Goldwein also added that the policies would hurt Medicare's funding as well. Payroll taxes, specifically FICA taxes, fund both Social Security and Medicare.
While there are real questions if all these policies would be enacted should Trump win a second term, simply adding to existing concerns over Social Security's solvency could be enough to drive people to make poorer financial decisions.
"It’s beyond irresponsible, toying with people’s retirement," Laurence Kotlikoff, a professor of economics at Boston University and an expert on Social Security. "We already have too many people taking benefits too early, forfeiting hundreds of thousands of dollars in benefits."
Read more: Do you pay taxes on Social Security?
'They're paying into the Social Security program'
The report considered Trump's promises to get rid of taxes on Social Security benefits, tips, and overtime as well as his vow to deport undocumented immigrants and impose a 10% to 20% tariff on imported goods and a 60% tariff on Chinese goods.
By not taxing Social Security benefits — which directly go to Social Security and Medicare Trust Funds — Social Security would lose $950 billion, the analysis found.
Another $900 billion would be lost to the elimination of taxes on overtime and tips, the former of which is subject to FICA taxes and the latter must be reported at tax time.
The tariffs and deportations would reduce the money going to Social Security by $400 billion. In total, that's $2.25 trillion less than would be collected under current law.
Goldwein noted that tariffs increase Social Security spending because tariffs increase prices, boosting inflation. Benefits are indexed to inflation, so they would also increase with consumer prices. The Social Security Administration would then have to pay out more in benefits.
Undocumented immigrants also add to Social Security's coffers, Goldwein said.
"The vast majority of undocumented immigrants are of working age. Many of them work in jobs where they pay taxes either because they gain some legal status after they've gotten here, or they write down a random Social Security number," he said.
"Either way, they're paying into the Social Security program."
In fact, the Congressional Budget Office estimated that the recent surge in immigrants is expected to bring in $348 billion in Social Security taxes over the 2024–2034 period. The CRFB report assumes this would be reduced to $100 billion to $150 billion under Trump's immigration policies.
Republican presidential nominee Donald Trump delivers remarks on the damage and federal response to Hurricane Helene on Oct. 21 in Swannanoa, N.C. (AP Photo/Evan Vucci)
Another domino?
While the report only focuses on Social Security, Medicare would also be threatened, said Goldwein, who noted that he might do an additional analysis on that.
Right now, the reserves that Medicare uses for hospital coverage — known as Medicare Part A — are expected to run out in 2036. Eliminating just the taxes on Social Security benefits would move up that date to 2030.
Add in the other tax breaks, tariffs, and deportations, and "those extra should make it even more severe," Goldwein said. "Medicare would likely be insolvent before 2030 under these proposals."
The Medicare trustees have previously said the fund's insolvency could first cause delays in payments to health plans and hospitals. Additionally, seniors' "access to healthcare services could rapidly be curtailed."
The real-life consequences
The severity of Social Security cuts would differ by income. The report found that about half of beneficiaries would see the full 33% cut — typically those with lower incomes who don't pay taxes on benefits now. In 2024, an individual with income below $25,000 does not have to pay taxes on their benefits. That amount is $32,000 for a married couple filing jointly.
Seniors with just enough income to pay taxes would see a 30% cut to their benefits, while those with $100,000 in annual income in retirement would experience a 26% reduction. The very highest income retirees would only see a 3% nick off their benefits.
The cuts are regressive partly because the tax on Social Security benefits is progressive, meaning people are taxed more if they have higher incomes. Those with the top incomes would see a tax break that would largely offset the cut in their benefits.
"Those who are impacted, the majority of them are in the middle class," said Emmanuel Eliason, a certified financial planner in Centennial, Colo. "So less money in the pocket means that their lifestyle may have to be adjusted."
Read more: How to find out your 2025 Social Security COLA increase
The reserve fund for Social Security would run empty by 2031 instead of the current estimate of 2034 if Donald Trump's tax breaks, tariffs, and mass deportations are imposed, new report shows. (AP Foto/Jenny Kane, Archivo)
For those who rely on Social Security for the majority of their income, a cut like this could be devastating, said Monica Dwyer, senior vice president at Harvest Financial Advisors in West Chester, Ohio.
"It will increase the need for government aid such as affordable housing, Medicaid, and other social services, and it will likely mean more homelessness than we have ever seen," she said.
Just the threat of steeper Social Security reductions could hurt people's financial planning.
A survey last year from asset management company Schroders found that the top reason workers said they plan to take benefits before 70 is because they're concerned Social Security could stop paying out before they reach that age.
But if they wait until 70, their benefits would be larger — 8% more every year past full retirement age. Many experts encourage people to wait as long as possible to claim to get the bigger benefit.
"Sometimes the fear about whether Social Security is going to be available encourages people to make bad Social Security decisions," Dwyer said. "I am very concerned that [the effect of Trump's proposals] will make people’s irrational thinking worse."
Janna Herron is a Senior Columnist at Yahoo Finance. Follow her on X @JannaHerron.
Donald Trump's plans would drain Social Security years earlier than expected, report says
William Gavin
Mon, October 21, 2024
Former President and Republican presidential nominee Donald Trump - Photo: Win McNamee (Getty Images)
Former President Donald Trump’s plans to slash taxes are expected to “dramatically” weaken Social Security’s finances — and make the program insolvent three years ahead of schedule.
The Social Security Administration (SSA), the government agency that administers the program’s benefits to Americans, expects its coffers to be depleted by 2035, according to a May report. But proposals Trump has made on the campaign trail would exhaust Social Security by 2031 or 2032 at the latest, according to a report released Monday by the nonpartisan Committee for a Responsible Federal Budget (CRFB).
As of 2024, almost 68 million Americans receive a check from the SSA each month. The vast majority of those people are at least 65 years old and many depend entirely on the program for income after retiring, the National Institution on Retirement Security found in 2020.
“SENIORS SHOULD NOT PAY TAX ON SOCIAL SECURITY!” the Republican presidential nominee wrote in July on his social media platform, Truth Social.
Recipients of benefits must pay federal income taxes if their combined income is higher than $25,000 each year if they file individually, or $32,000 for joint filers. That revenue helps helps fund the Social Security and Medicare Hospital Insurance trust funds.
Without that funding — combined with the many other tax cuts Trump has proposed — and the former president’s plans to impose massive tariffs and deport unauthorized immigrants, Social Security’s funding will be cut by as much as $2.75 trillion.
Ending taxation of Social Security benefits alone could cut between $850 billion and $950 billion from its cash reserves, while ending taxes on overtime pay and tips would slash anywhere between $150 billion and $1.05 trillion. Heavily restricting immigration and imposing tariffs would reduce the balance by between $300 billion and $750 billion, according to the CRFB.
After Social Security is insolvent, the program’s spending would be limited and likely result in a $16,500 cut in annual benefits for the typical dual-income couple retiring in 2033, the CRFB said.
Under current laws, benefits would have to be cut by 23% by 2035, according to the Congressional Budget office. Trump’s plans would raise that benefit cut to 33% by 2035, according to the CRFB. Although, some beneficiaries would likely see their real after-tax benefits cut by smaller percentages.
In the past, Trump has said he will “not cut one cent” from the program, nor will he change the retirement age. In a town hall last year, he proposed taking advantage of the “incredible wealth under our feet” by drilling for more oil and natural gas to grow the economy. However, that would cover less than 4% of Social Security’s shortfall, the CRFB said last year, noting that opening up “all federal land” to drilling couldn’t solve that problem.
Mon, October 21, 2024
Former President and Republican presidential nominee Donald Trump - Photo: Win McNamee (Getty Images)
Former President Donald Trump’s plans to slash taxes are expected to “dramatically” weaken Social Security’s finances — and make the program insolvent three years ahead of schedule.
The Social Security Administration (SSA), the government agency that administers the program’s benefits to Americans, expects its coffers to be depleted by 2035, according to a May report. But proposals Trump has made on the campaign trail would exhaust Social Security by 2031 or 2032 at the latest, according to a report released Monday by the nonpartisan Committee for a Responsible Federal Budget (CRFB).
As of 2024, almost 68 million Americans receive a check from the SSA each month. The vast majority of those people are at least 65 years old and many depend entirely on the program for income after retiring, the National Institution on Retirement Security found in 2020.
“SENIORS SHOULD NOT PAY TAX ON SOCIAL SECURITY!” the Republican presidential nominee wrote in July on his social media platform, Truth Social.
Recipients of benefits must pay federal income taxes if their combined income is higher than $25,000 each year if they file individually, or $32,000 for joint filers. That revenue helps helps fund the Social Security and Medicare Hospital Insurance trust funds.
Without that funding — combined with the many other tax cuts Trump has proposed — and the former president’s plans to impose massive tariffs and deport unauthorized immigrants, Social Security’s funding will be cut by as much as $2.75 trillion.
Ending taxation of Social Security benefits alone could cut between $850 billion and $950 billion from its cash reserves, while ending taxes on overtime pay and tips would slash anywhere between $150 billion and $1.05 trillion. Heavily restricting immigration and imposing tariffs would reduce the balance by between $300 billion and $750 billion, according to the CRFB.
After Social Security is insolvent, the program’s spending would be limited and likely result in a $16,500 cut in annual benefits for the typical dual-income couple retiring in 2033, the CRFB said.
Under current laws, benefits would have to be cut by 23% by 2035, according to the Congressional Budget office. Trump’s plans would raise that benefit cut to 33% by 2035, according to the CRFB. Although, some beneficiaries would likely see their real after-tax benefits cut by smaller percentages.
In the past, Trump has said he will “not cut one cent” from the program, nor will he change the retirement age. In a town hall last year, he proposed taking advantage of the “incredible wealth under our feet” by drilling for more oil and natural gas to grow the economy. However, that would cover less than 4% of Social Security’s shortfall, the CRFB said last year, noting that opening up “all federal land” to drilling couldn’t solve that problem.
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